Some have advised that an effective tool in patient account management — both for insurance and patient/self-pay balances — is using small balance adjustments to effectively resolve these accounts.
Putting the criteria for that kind of account management into perspective can be a challenge, however. Are there unexpected pitfalls and risks? Does the game change in any meaningful way when it’s an insurance balance as opposed to a self-pay balance?
- Best practices around defining what a small balance is seem to range from as low as $2.00 to around $10.00.
- When the age on the claim reaches more than x number of days — usually between 45 and 60 — and the balance is less than $5.00, the balance is generally adjusted off as a miscellaneous adjustment.
- However, when the insurance credit balance is less than your cut-off amount (we’ll go with $10), common practice seems to be to adjust off the balance to third-party recovery. You’ll want to notate the account in the case that an insurance company requests this at a later time. Notating allows you to view in your system, reverse adjustment, and refund, if necessary.
Medicare, Medicaid, and Blue Cross Blue Shield require more documentation. You have to be able to show that you tried to collect the balance before writing it off.
Additionally, finding yourself with Medicare/Medicaid/BCBS small balance could be a flag to pay attention to:
- Is your reimbursement set accurately in your charge master file?
- Is your front desk collecting the Medicaid copay when they are the secondary payer?
- Is there an attempt to collect account balances when patients check in for appointments?
- Start with the basic write-offs; however, you’ll want the flexibility to add write-off categories as the need arises.
- Make sure you already have in place procedures around which write-offs require managerial approval. You do not want the time-sink inherent in forcing staff to get approval for routine write-offs. On the other hand, you want to be careful about a completely hands-off approach. Make sure write-offs are addressed in your compliance plan so staff understand their responsibilities.
- Review all write-off categories monthly, paying attention to unusual spikes as well as creeping trends. Keep in mind that if you raise your fees and don’t renegotiate your contracts, your contractual write-offs are going to escalate, and you’ll need to account for that difference in your evaluation.
- Audit write-offs periodically to make sure that they are being done correctly. Staff will know that their work is being checked and you can be sure the numbers you are making business decisions on are sound.
- Best practices for unnecessary write-offs are no more than 5% of your total expected collections. The formula for expected collections is gross charges minus necessary/approved write-offs.